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Donor Prospect Research 101

Mary Novokhovsky

This week we hosted a webinar along with DonorSearch to help nonprofits tackle prospect research. You may think that your organization is too small for prospect research, or that it’s just “not right” for you- but we’re here to tell you that’s just not the case!

Before we get started on tips for discovering and evaluating prospective donors, their interests, relationships, inclination to give and  philanthropic capacity- let’s squash some common myths about prospect research.

Myths about prospect research

  • My organization is too small!
  • Only certain types of organizations (like higher ed) use prospect research.
  • We can’t do major gifts.

None of these are true If you fundraise, you aren’t too small. You may be doing ‘prospect research’ already by networking and researching on a small scale.

Major gifts are more efficient, best return on your investment compared to other types of gifts.

DonorSearch has a few hundred clients with a budget of under $1M!

Why major gifts matter

The most recent Giving USA report just came out and charitable giving continues to be on an upward trend. 2016 giving reached $390.05 billion in (2.1% of GDP). This is an increase of 2.7% from 2015.

Individuals continue to be the highest contributors of charitable gifts, which makes prospect research an even more important task.

Markers of a good prospect

Donors give because they want to make an impact, feel financially secure, have a strong belief in your values, are affiliated with your organization

Donor Identification Process:

  •  Collect names: find the people you have the relationships with, work your connections, look at other similar organizations (donors typically give to multiple orgs), identify people in your service area
  •  Gather & analyze relevant data

Most organizations get 80% of revenue from 20% of their donors.

Researching to learn your donors/prospects’ giving capacity will help you craft your ask. Do you ask them for $10,000 or $1,000?

Donor Research Process:

  • Giving to Your Organization Donors are more likely to give again if they had a positive experience in the past. Renewals are easier than new acquisitions.
    • R(recency, or last gift) +F (frequency, or number of gifts) + M (monetary, or total given) = RFM. Calculate a percentile for each criteria and add them together.  You can then rank
      your donors based on RFM to identify good prospects!
  • Previous Giving to Other Organization People who have made large gifts elsewhere are better candidates (assuming you have a relationship with them, or can develop them.)
    • You know they have money, they know the process for giving, you just have to engage them.
  • Position as Foundation Trustee or Board Member
    •  They understand the importance of philanthropy and major giving.
  • Political Giving
    • Most big political donors have also given numerous charitable gifts.

FAQ about donor prospecting

Still a little confused about where to start on your prospecting journey? Here are some of the most common questions and their answers.

Q: How is philanthropic data defined? What type of information is it?

A: Broad term referring to any info related to philanthropy (i.e. Gift records in your database, board service and other affiliations, political gift records)

Q: Is this information sensitive? Confidential?

A: Philanthropic data is sensitive (i.e building a giving profile on someone).

A: Gift records in your database are confidential.  DonorSearch data is not since it is all from public sources.

Q: Are there specific suggestions on how to use this information effectively?

A:

  • What are your goals? Define them.
  • How do you fundraise now? Identify opportunities to increase opportunities for giving.
  • What is your definition of a major gift? Different for every organization.
  • How is your board willing to help? Board members don’t necessarily need to close gifts – each board member brings their own skills that may not include actually making an ask (i.e. storytelling, networking)

Q: Is direct mail a good donor acquisition strategy?

A: There are a lot of ways you can purchase direct mail lists, but it isn’t necessarily the best way to get major donors. Focusing on your existing donors and your board members’ network will be more impactful. Start with the people that you have connections with.

Q: What if I ask someone for too much money? I don’t want to anger the donor and lose them as a donor altogether.

A:

  • If you can determine how much they are giving elsewhere (i.e. $100,000), you asking for a smaller gift (i.e. $10,000), it may be a drop in the bucket to them.
  • In an ideal scenario, you’d talk with the donor to understand how much they are able to contribute – they tell YOU the amount they can give instead of you guessing. The more you learn about them, the more you’ll understand their circumstance. Engage someone before making an ask. Do your homework. Let someone explain their level of interest and why they are interested in your organization.

Get Started

Interested in how DonorSearch and Neon can help you maximize your prospect research? If you’re a current client check out Neon’s DonorSearch integration. Interested in learning more about our product? Let’s get in touch.

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